Author: CryptoAdvisor

Bitcoin Fan and Trader.

Short Term Update: MtGox daily chart

On By CryptoAdvisorIn Short Term Trading1 Comment

This is a short term view of the last 30 days,the market after a strong rise to 6.80$ is moving sideways and still  fighting trying to reach the 7$ barrier. I’m noticing a drop in volatility and i need it in order to break the 7.2$ january top, at this point the BTC/USD might retest the lower channel at 6.1$ giving the opportunity to the smart speculator to open a long position for a quick bounce in prices.

I’ve talk about a maximum target of 10.2$ for mid July in the previous update, at this point is impossible to reach it with this drop of volatility, i’m more for a top at 8-8.5$ this month or next one where i’ll probably close the trade i opened at 5.06$

As you can see in the chart even the net volume is dropping confirming that bitcoin is losing steam and it is going sideways but still inside the keltner channel i drew on the chart.

If 6.1$ got broken strong support for this month is the previous accumulation price zone at around 5.2$

 

 

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading1 Comment

I think we are seeing the beginning of a  weekly strong  uptrend after a long accumulation phase spent at 5$, if the BTC/USD will drop under 5.5$ the picture might change a little, in this case we will see probably the bitcoin moving sideways in the 4.5$-5.5$ zone

Judging the last 6-7  bars of this weekly chart net volume i see a nice buying pressure and i’m not worried for my open trade, at the moment i’m still bullish probably till mid July. I added a 1 month target in the chart and i used full volatility in the calculation of this target, so i think that will be very hard to go above 10$ for mid July.

Here a brief explanation of how i derived the 10.2$ target:

  1. compute natural logarithm of data increments
  2. compute the mean for all data increment computed in step 1
  3. compute rms (root mean square) of all data increments, squaring each data increment and sum all togheter, this process is simular to the calculation of standard deviation
  4. compute target multiplying reference price for the exponential of RMS and square root of time (in terms of hours days weeks or months)

    V0 * e^+rms * sqrt (t)

    where t is time, rms the volatility and V0 the reference price

The reference price i used is 6.2$ but you could use also an average value of a moving average or another digital filter.
At the moment the rms value is 0.091497, time is 30 because using daily values i want to see a monthly target , so 30 days and you have:

6.20*exp(+0.091497*sqrt(30))=10.2338$ rounded to 10.2$

You can compute RMS using last 2-3 months for better estimation of Current Volatility, at the moment volatility level is about 80% of  the historical value, if you do the math you have a target of ~8.5$ instead of 10.2$ that i consider the maximum target for the next month. For long term you should use a more complex approach because this one doesn’t include the growth factor, it is suitable only for short term; why? well  because if the growth is very negative or positive with the pass of time it erodes the effect of volatility lowering or raising the target estimate.

At the moment the historical daily growth factor of BTC/USD is negative and it reminds me a typical bubble behaviour; when it goes up is just because of  Volatility Bursts.

Long Term Update: MtGox Weekly View

On By CryptoAdvisorIn Long Term Trading2 Comments

This week range estimate is 4.96$-5.34$. The February 2012 bottom at 3.87$ is strong support. I think a base building period characterized by a slow upward drifting movement is nearly complete.  Given the very good resilience shown by BTC/USD since the drop from january top I think this means that a big rally is due but we lack an important element for now, volatility.

As i indicated in the below chart in the last 5 week we have had always positive net volume, this is good and tell us that investors are consistently buying this market.

I indicated also a 1 month target given current volatility level that is very low (about 15% of historical value), if bitcoin will move back to the volatility level shown in 2011 the next 30 days target is in the 8.3$ price zone but unlikely it will do it; would be great to touch 6.5$ by July.

I’m still long from 5.06$ and i think i’ll carry this trade for long term, considering also the very low volatility that nullify any short term trade opportunity.

Short Term Update: MtGox daily chart

On By CryptoAdvisorIn Short Term Trading2 Comments

This is a short term view of the last 30 days,the market is still  fighting to go stay above 4.7  and to break above 5.1$. I’d like to see an increase in volume activity and the BTC/USD going above 5.3$ but at the same time the drop of volatility reduce the risk of this trade that i opened 1 month ago at 5.06$, at the moment it’s a stall in a long congested phase from 4.7$ to 5.3$

As you can see in the chart even the net volume is dropping signaling that buying in the last 3 days  is going out of steam, i think that a new drop to 4.8$ is possible before rebouncing again; in any case for who want to give a try i recommend to apply a stop loss under 4.7$ and sell at the resistance around 5.2$-5.3$. For this week the range is the same of the previous week , support at 4.7$ and resistance at 5.3$

When the volatility is so low most of the time is very difficult to have a profit following the indication of an oscillator like the one i use because the underlying noise is equal or even higher then the signal; you have to wait for an exploding volume and a rising price, two important factors that statistically may lead to further advancing prices like what we’ve seen happening last January.

Definitely a very boring period for short term speculators but i remain bullish for long term.

 

Short Term Update: MtGox daily chart

On By CryptoAdvisorIn Short Term Trading

This is a short term view of the last 35 days (the distance between two vertical dotted lines is one month), i added the Keltner Channel to the price; basically Keltner channel is a technical analysis indicator showing a central moving average line plus channel lines at a distance above and below, i properly set up the parameters in SierraChart to replicate as much as possible the daily range estimates that i publish every day on my Twitter channel, range estimates that are computed with a more complex approach already explained in one of my old posts here, more infos are also availables under the technical section of this blog.

After the first attempt to break the upper channel line at 5.4$ the market is now struggling to stay around 5$. Despite this congestion phase i’m not going to close my short term trade and my stoploss is always under 3.8$ for now.

As you can see in the chart even the net volume activity is dropping signaling that volatility is very low during this consolidation phase. Usually there are three types of consolidation: a ledge, up to ten bars; a congestion, from ten to twenty bars and trading ranges, with more then twenty bars. At the moment there are seven bars of consolidation and probably within one week the price will break somewhere above or below the current up/down channel line or at least it will retest the 4.7$ support or 5.3$ resistance line.

It’s hard to say on which direction BTC/USD will break but considering the bullish underlying trend i’m tempted to say that this consolidation will resolve in an upside breakout of the upperline.

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading1 Comment

I think we are seeing a correction in a weekly uptrend, if the BTC/USD will drop under 4.7$ the picture might change a little, in this case we will see probably the bitcoin moving sideways in the 4$-5$ zone

Judging the last bar of this weekly chart net volume i dont see a great selling pressure and i’m not worried for my short term trade, at the moment i’m still bullish.

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading2 Comments

The weekly moving average turned slightly upward again after nine weeks of weakness, the BTC/USD after a strong bottom at 3.8$ is fighting to break through~5.1$.

 I’ve seen an increase in the buying pressure this week but i say again that without a proper breakout of the 5.1-5.2$ zone i dont think that the trend will reverse again to the upside going above the previous top at 7.2$, but at least the sequence of rising lows of the last four weeks is a positive note.

I want to do a consideration about the inflow/outflow of money during the recent strong upmove and the correction of the last weeks; during the upswing from the november low to january top more then 700k usd has been put in this market, while during the correction around 2 mln usd has been extracted, this is a lot of money and despite of that huge selling pressure the market retraced ~50% (from 7.2$ to 3.8$) without a collapse to the 2$ zone, usually a 50% retracement is a strong level of support.
But what does it mean? well i think that despite the fact that so much money have been extracted in the last 3 months the BTC/USD is showing great resilience and i think that a new wave of investors kicked in for the long term thus giving to the 4$ price level a great importance and it shouldn’t be violated this year. I think also that at MtGox there is enough liquidity to go double digit during the second part of the year, my guess.

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading

This is a weekly view since october 2011. It is visible the November low at 1.94$ and the recent top at 7.2$, in the second pane of the chart there is the net volume and it’s clearly visible how it moved from a negative situation to a flat one, after the drop from 7.2$ to 3.8$ the picture now looks mixed.

The weekly ALMA moving average has now a downward slope, but less intense.I think that the underlying long term is still intact, despite three months of high selling pressure the price isn’t  dropped too much. It is very important  to see buyers coming back in the form of a strong positive net volume on a monthly basis (now still negative since january top) otherwise i dont think the 3.8$ will hold and considering that the april-may period has been very volatile last year and we could face rising volatility in the upcoming months there’s good chance that the congestion area from 4$ to 5$ will not last much.

Short Term Update: 8h chart MtGox

On By CryptoAdvisorIn Short Term Trading

In the last update i said that i was going to buy again if the BTC/USD would have rised to 5.4$ and fall a bit; well it it happened but during the recoil phase of the cycle it dropped too much down to 4.5$, i’m not going to buy if this weakness persist, moreover the weekly moving average is still pointing down due to the recent drop to 4.5$.

I’ll remain out of the market for now, i want to see also a positive rate of change for the slower weekly moving average before buying; the overall picture is still bullish but uncertain in the short term.

Short Term Update: 8 hour chart at MtGox

On By CryptoAdvisorIn Short Term Trading1 Comment

This is an 8 hours chart of last 30 days since the moderate drop to 3.8$ and the subsequent ascending triangle that is developing. I marked on the chart the two moments where small cycles started, on point 1 and 2, on point 3 a new cycle  might start carrying the btc towards the static resistance, about 5$.

I think i’m going to buy again if the BTC/USD will go through 5$ during the next thrust of the cycle reaching maybe 5.4$, during the recoil phase of the cycle it will probably retrace without going down 5$, that could be the right moment to enter in the market with a long position. It’s an hypothesis, let’see if it will materialize.

At the moment, during this ascending triangle the cumulative net volume is slightly negative (~ -32000 btc) , in other words around 110,000$ have been extracted from the market  but right now the bid size of the book is stronger compared to the ask size and with enough money present to move the market to at least 5.5$ in case of a break out of 5$.

Thank you guys and see you at the next update.

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading2 Comments

I think that the bounce from 3.8$ is now completed, the weekly moving average is flattening out at 5$ where we have a series of daily highs with rising lows (ascending triangle), it’s time now to take a decision to break or not 5$ level for a first target at 5.4$, it’s mandatory now otherwise sellers will take again the control on this market pushing the prices back again to 4$.

Without this breakout of the 5.2-5.4$ zone i think that the BTC/USD will probably continue to consolidate in the 4$-5$ zone in the weeks to come.

During the last 3 weeks of rebounding prices i’ve noticed a slighty positive net volume, sign of a timid comeback of buyers.

Long Term Update: Weekly View at MtGox

On By CryptoAdvisorIn Long Term Trading

The weekly moving average is acting
now as resistance, the BTC/USD after a strong bottom at 3.8$ rebounced exactly to my average at ~5.2$. I’ve seen a huge increase in the selling pressure during that bottom as it is visibile in the long negative net volume bar.

Without a proper breakout of the 5.2-5.4$ zone i dont think that the trend will reverse again to the upside going above the previous top at 7.2$, consequentally i expect for march a consolidation around these price levels (3.5-5.4$).